Australian investment fund Babcock & Brown Capital and its manager said today that they had acquired a 12.5% stake in Eircom Group, which has been the subject of takeover speculation. The investment is worth about €250m.
'As a first investment for Babcock & Brown Capital, we see this as a strategic shareholding in a company with robust fundamentals and a positive outlook which is not fully recognised by the market at the present time,' a B&B Capital statement said.
B&B Capital has a 10.8% stake while its manager, Babcock & Brown has a 1.7% interest, according to a statement from the Australian group. The group listed in February in Australia in what was then the world's 13th-largest public share offer so far in 2005.
Eircom said last week it was not in talks with Swisscom after media reports that the Swiss carrier had made overtures worth about €3 billion. Shares in the group jumped about 10% after the speculation.
B&B Capital Executive Director Rex Comb said the investment fund was optimistic about the Irish economy and Eircom had made the right strategic move in acquiring mobile phone firm Meteor.
'Over time we believe the market will recognise the inherent value in the core network business and will re-rate it in line with other utilities,' the Australian company said. We believe Eircom's fundamentals will deliver increasing value irrespective of reducing operating costs or increasing leverage,' it added.
Eircom shares closed 12 lower at €2.09 in Dublin this evening - a fall of over 5%.
